Brian Cashman’s decisions now will impact Yankees in 2014

New York Yankees general manager Brian Cashman is tasked with creating a roster beginning this season which will put the organization in a position to meet an ownership mandated goal of getting below the competitive balance tax, or luxury tax as it is also known by 2014. The Yankees had an Opening Day payroll just shy of $210 million in 2012. They need to bring this number below $189 million in 2014 and the process began yesterday for Cashman at the general manager’s meetings in Indian Wells, California.

Without question the agents for Josh Hamilton and Zack Greinke (maybe not Mr. Afraid of NY) will search out Cashman this week or grab him by phone and for the first time in his tenure, he’ll almost instantly have to tell the players thanks but no thanks. It is the only answer he can give as the payroll is currently constructed. Or is it?

Cashman would need to do some slick navigation to add the type of salaries Hamilton and Greinke are in line for. He’d have to get rid of Curtis Granderson‘s $15 million and because the Yankees are already $75.25 million invested with just three people (CC Sabathia, Mark Teixeira and Alex Rodriguez) under contract for 2014 he still may not be able to afford them. Matt Hunter worked out a plausible 25-man roster for the 2013 season here. I’ll see if I can lay out the groundwork for 2014 and in the end it seems that it could be easier than everyone is making it out to be.

New York Yankees general manager Brian Cashman will be on the phone often this offseason, but the checkbook has some restrictions attached. (Image: Tim Fuller-USA TODAY Sports)

Cashman continues to say that he sees Rodriguez (owed $26 million in 2014) with the Yankees in 2013 and it is possible A-Rod will never have serious suitors willing to take a large portion of his contract on anyway so it is more or less safe to assume he’ll be around in 2014 as well. The Yankees would be on the hook for any balance they are paying even if he is not in NY in terms of the competitive balance threshold. Letting him go altogether essentially means that they’re working with 26 spots in the payroll, but only 25 would be in pinstripes. This doesn’t make much economic sense.

Another factor to consider for 2014 and beyond is Robinson Cano, who will be seeking $20-plus million per season for seven to ten years after 2013. Another hefty price tag will be Derek Jeter who is completing his 3-year/$51 million deal in 2013. Jeter owns a player option worth $8 million which can increase to $17 million if he earns certain awards throughout the three-year deal. He has not earned any of the honors yet in the contract, but he could net one this year with a Silver Slugger Award at shortstop which would add $1.5 million to his total. So we’re talking five players who will set the Yankees back about $103.25-112.25 million if Cano makes $20 million and Jeter $8-17 million in 2014. That leaves $76.75-85.75 million to work with for the remaining 20 players. That seems like plenty of cash to add multiyear free agents in 2013 doesn’t it? Or maybe they’ll be better served to fill 2013 with multiple one-year deals and then regroup in 2014 if they feel there are better options in that class.

Further circumstances to consider for 2014 are Phil Hughes, Boone Logan and Joba Chamberlain will all be free agents. Only Hughes may be worth throwing free agent money at based on what we know now and he’d have to have another improved season in 2013 to warrant it. Brett Gardner and David Robertson will be in their final arbitration years so figure they are earning about $5 and $3.5 million respectively (and conservatively) in 2014 based on projections Major League Baseball Trade Rumors have set for this season’s arbitration class. If they decide to keep Hughes, Gardner and Robertson, plus the others mentioned so far, the infield is set, two starting pitchers, one reliever (maybe even the closer) and one outfielder.

Here are some other inferences we can take into account. Mariano Rivera, Andy Pettitte, Hiroki Kuroda (if he is signed this season or not) and Granderson are gone from the equation. Under team control and positioned to be on the major league roster would be Michael Pineda and David Phelps with Ivan Nova, Chris Stewart and Eduardo Nunez possibilities to still be around. All five players will be in their first year of arbitration so they would be cost effective. If we assume Pineda, Phelps and Nunez survive the Yankees would have four members of the rotation and a utility infielder or quite possibly their starting shortstop in Nunez (I know laugh but it is a couple years away).

With all of that the Yankees would have to fill one outfield position, one OF/DH, three bench spots and five relievers assuming the Yankees carry 12 pitchers. We’re going to have to break out the charts now.

Update: In error I initially wrote this article using a payroll of $189 million. That is in fact incorrect in determining the actual way the threshold is derived. The average annual value of the contract is what should be reflected across the 40-man roster. Updates were made to Rodriguez, Sabathia, Teixeira and Jeter’s figures in the tables. Also, teams medical expenses and other expenses count against the tax. For our purposes, I have supplied updated charts assuming the expenses run $10.5 million (about the middle ground of what I have seen) and the remaining 15 members of the 40-man roster will earn a total of $1.5 million ($100K each) which is probably a bit high as some of them will merely get paid the minor league salary which is set for $80K in 2014. So, the Yankees will need to be in the neighborhood of $177 million but that will be cutting it close, so I’ve tried to keep by figures to the $175 million range in the charts which now reflects AAV. Thanks to David Palozeg who left a comment on another article for noting the error.

 

So, here is what I came up with. There are plenty of items to note. Jeter takes his option and he receives one bonus of $1.5 million by winning the Silver Slugger for 2012 (it’s a guess – update: he did win the award and the chart accounts for it accurately). There is a possible hitch. He may decline the option and try to sign for more with a brand new deal. But let’s leave it like this for now. Consider Granderson gone. Assume the Yankees sign Russell Martin or another catcher for two years for 2013-14 figuring none of their younger catchers will be ready. The number ($7 million) for 2014 may be a bit high, but it’s a place holder.

Notice the multiple positions for Rodriguez and Jeter. Who knows where they will play, but the Yankees will have to be fluid because of it. Nunez is at shortstop. The Yankees sign Phil Hughes to a free-agent contract (who knows and there is another scenario coming so hold tight if you don’t like that option). There are three players (one outfielder, an OF/DH and one starting pitcher) the Yankees could sign/trade for either beginning in 2013 or for 2014. This is the salary they’d make in 2014. So, again, Greinke and Hamilton are off the list based on these numbers. I’m guessing the Yankees use Austin Romine as a backup or some other very cheap option if they feel Gary Sanchez needs more at-bats in the minors (wait for version two Sanchez lovers). Assume that David Robertson is the closer. I’d also guess that reliever Mark Montgomery will be up with the big club in 2013 so he gets a small bump over the league minimum which is set for $500K in 2014 as set forth by the collective bargaining agreement. The salaries for relievers and bench players could be maneuverable up or down to accommodate a larger salary while then diminishing another. This is obviously cutting things close, but I’ve also got four fairly decent sized free agent salaries in there. The Yankees would not have to skimp much at all.

The next scenario makes a few changes to the first one.

Here Cano is making $22 million. Jeter is making slightly more figuring he wins another Silver Slugger next season (big assumption, but who can doubt him at this point). No Hughes. No high priced catcher. They get to add another free agent starter and Sanchez takes over the catching duties. It may be a long shot but it is plausible in my opinion. They’ll need a better than average backup catcher thus the higher value in that slot. Everything else remains the same as the previous version. Again, there is plenty of maneuverability here.

This is incredibly difficult to predict, but the way things are looking the Yankees will be able to meet the $189 million limit without feeling like their hands are tied because of the four players making 20-plus million dollars. The scenarios above provide plenty of wiggle room should Cano and/or Jeter make more. Some of the Yankees prospects could blossom in 2013 and ease the salaries even further. I think what the above demonstrates is that the Yankees can be very competitive at these payroll levels especially considering the very large investments at the top. Cashman and the Yankees ownership are going to need to be forward thinking beginning in this offseason so they are pointed in the right direction for 2014. Every move they make now directly affects 2014, but this new salary limitation will not lessen the Yankees abilities on the field.

Topics: New York Yankees

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  • Chris_Carelli

    A comment on another payroll post brought to my attention that I missed two important aspects of how the tax threshold number is determined. In my haste to get to $189 million, I used straight opening day payroll numbers and not the AAV, plus I’ll need to re-account for the medical costs and other expenses which will obviously be a guess but I’ve seen anywhere from $10-11 million used as a figure per team. I will work on these numbers and update accordingly. Also, as I suspected Jeter won the Silver Slugger Award this evening.

  • ikkf

    Good article.

    I’m contrary to most Yankee fans in that I think the Yanks should drastically reduce their payroll. Just look at what’s happened over the last ten years. The luxury taxes they’ve been paying have essentially been funding the teams that have been beating them in the playoffs. They’ve been defeated by their own big spending. They could win on $100 million if they played smart enough.

    Also, anyone here know why the Yanks don’t take an approach like Tampa Bay and other small-market teams and lock up their good players at an early age? It seems fiscally shortsighted and downright dumb to wait until they’re free agents before negotiating long-term contracts. If they’d signed Cano to a 7-year contract at his first year of arbitration, they could have locked him in at a reduced rate during his peak years. Now they’ve got a big dilemma ahead of them.

    The Yankee front office keeps committing big dollars in long contracts to free agents, then admit that it never expects each player to produce much in the final 4 years of each contract. Isn’t that wretched excess, and worse, a pretty ineffective way of doing things?

    • Chris_Carelli

      Thanks for the comments. Good points. I’m not certain as to why they don’t try to lock up players as Tampa and others do, but I agree if they plan on continuing to lower payroll they’ll have to be more forward thinking with how they handle their young stars.

      I do think their needs to be a balance. If the Yankees can find a way to do both (sign top FAs and build within), they can still sign high profile players in addition to creating a farm system with talent. I’m thinking they may be finally heading in that direction. We’ll see.

      • ikkf

        Agreed. The Yanks don’t have to take an Oakland A’s $55 million payroll approach to things. In fact, that might hurt them. They’re in New York City, they’re the premier glamour team in baseball, and part of their entertainment value for their fans is providing marquee names or at least making a big splash. But, as they don’t have to be as colorless as the Mets, they could make some really smart moves and recapture that old magic.

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